Rio2 Announces Financing Package to Fund the Fenix Gold Project
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VANCOUVER, British Columbia, Oct. 21, 2024 (GLOBE NEWSWIRE) -- Rio2 Limited ("Rio2" or the "Company") (TSXV: RIO; OTCQX: RIOFF; BVL: RIO) today announces that it has arranged a mine construction financing package expected to total approximately US$150 million for construction and general working capital of the Company's 100%-owned Fenix Gold Project in Chile ("Fenix Gold" or the "Project").
This funding package marks a significant de-risking milestone for Fenix Gold, and with all key sectorial permits for construction now in hand, Rio2 is positioned to fully execute the development, ramp-up and operation of the Fenix Gold mine.
The total financing package is comprised of the following:
US$120 million financing package (the "Wheaton Financing") with Wheaton Precious Metals International Ltd. ("Wheaton");
Overnight marketed public offering of common shares of the Company ("Common Shares") to raise gross proceeds of up to C$40 million led by Raymond James Ltd. and Eight Capital (the "Public Offering"); and
Non-brokered private placement of Common Shares to Wheaton for proceeds of C$5 million (the "Wheaton Private Placement").
Alex Black, Executive Chairman of Rio2, commented: "This financing package is the result of a competitive and comprehensive process undertaken by the Company, with the assistance of Endeavour Financial as its advisor, to secure the optimal financing solution for the construction of our Fenix Gold mine. Wheaton's expanding commitment to us validates the quality of our Fenix project, and their continued backing as a cornerstone financial partner, in addition to the support of our shareholders, has put Rio2 in a position of certainty to fund Fenix to production. We are highly excited to advance construction in a responsible manner, build the next gold mine in Chile, and generate material value for all Rio2 stakeholders."
Randy Smallwood, President and CEO of Wheaton, commented: "We are excited to continue our support of Rio2 and Fenix with this project financing package. Fenix is a highly attractive, scalable gold project located in a well-known mining jurisdiction. Alex and his team have a strong track-record of success building and operating world-class mining operations in South America, and our continued investment in Rio2 and Fenix represents our confidence in the team and the Project".
Wheaton Financing
The Wheaton Financing is comprised of (i) a US$100 million flexible prepay arrangement (the "Flexible Prepay Arrangement"), (ii) a US$20 million contingent cost overrun facility in the form of a standby loan facility (the "Standby Loan Facility") and (iii) the C$5 million Wheaton Private Placement.
Concurrent to the Wheaton Financing, Rio2 and Wheaton have also agreed to an amendment (the "Gold Stream Amendment") to the existing precious metals purchase agreement that was entered into on November 15, 2021 (the "Existing Stream Agreement").
All definitive documentation for the Wheaton Financing has been executed. Subject to the satisfaction of certain customary conditions precedent, Rio2 expects to receive the second deposit from the Gold Stream Amendment in Q1 2025 and the first US$50 million tranche from the Flexible Prepay Arrangement in early 2025. The second US$50 million tranche from the Flexible Prepay Arrangement is expected to be received in Q3 2025.
A summary of the key terms of the Flexible Prepay Arrangement, Standby Loan Facility, Gold Stream Amendment and Wheaton Private Placement are outlined below.
Flexible Prepay Arrangement - US$100 million
US$100 million across two equal tranches (the "Prepay Deposit"), in exchange for total gold deliveries of 95,000 ounces of gold on the following schedule:
Year
Delivery Profile (oz)
2026
8,000
2027
14,000
2028
15,000
2029
15,000
2030
15,000
